Half-yearly Report
13 October 2010
BLACKROCK SMALLER COMPANIES TRUST plc
Half yearly financial announcement of results in respect
of the six months ended 31 August 2010
Financial Highlights
Six months ended
31 August 2010
Performance
Net asset value per share 433.59p
Movement in net asset value per share +13.9%
Movement in Hoare Govett Smaller
Companies plus AIM (ex Investment
Companies) Index +3.6%
Share price per share 349.00p
Movement in share price +18.8%
Revenue Performance
Return per share 5.22p
Interim dividend per share 2.20p
Change in interim dividend +10.0%
Chairman's Statement
Overview
During the six months to 31 August 2010, markets experienced mixed fortunes.
The recovery in stock markets from the lows seen in the Spring of 2009, which
had been fuelled by significant fiscal stimulus packages, continued into March
and then peaked in April. The subsequent sell-off which began in late April was
triggered by a number of uncertainties which led many investors to fear the
worst, including the possibility of a double-dip recession. The main concerns
were the sovereign debt problems in some southern European countries, the
sustainability of the high growth Chinese economy and the effects of spending
cuts by the new UK coalition government.
After falls during May and June, markets rallied in July. The rally followed
positive company earnings releases for the second quarter, the conclusion of
European banking stress test results and a significant pick up in the level of
merger and acquisition activity, all of which helped to bolster market
sentiment. Unfortunately, fears returned to markets in the final period and
August was a notably poor month for equities.
Performance
Against this uncertain backdrop, I am delighted to report that during the six
months ended 31 August 2010, the Company's net asset value per share ("NAV")
has increased by 13.9% and the share price has risen by 18.8% on a capital only
basis, and by 15.0% and 20.3% respectively on a total return basis. This
compared favourably with the Company's benchmark index, the Hoare Govett
Smaller Companies plus AIM (excluding Investment Companies) Index, which rose
by 3.6% on a capital only basis and by 5.0% on a total return basis.
Since the period end the Company's NAV has increased by a further 19.1% and the
share price by 24.0%, compared with an increase in the benchmark of 11.4%.
Earnings and dividends
Revenue earnings per share for the period to 31 August 2010 were 5.22p compared
to 4.00p for the corresponding period in the previous year. The Board has
declared an interim dividend of 2.20p per share (2009: 2.00p per share)
representing an increase of 10.0% over the previous interim dividend. The dividend
will be paid on 26 November 2010 to shareholders on the Company's register on
22 October 2010.
Gearing
The Company has a £10 million overdraft facility and a £15 million debenture,
which give the Investment Manager the ability to gear tactically. Gearing has
been maintained at approximately the same level throughout the period under
review. At the period end, the Company's net borrowing was £22.8 million, 11.0%
of shareholders' funds and 9.8% of gross assets.
Discount
The UK Small Cap sector has tended to trade on a wider discount to the
investment trust sector as a whole, possibly reflecting the illiquid nature of
some of the underlying portfolio companies. As at 31 August 2010, the Company's
discount stood at 19.5%, which is broadly in line with the sector, and since the
period end has narrowed.
Alternative Investment Fund Managers ("AIFM") Directive
In my annual statement to shareholders, I reported on the European Commission's
AIFM Directive which will create new regulatory obligations and costs for the
investment trust sector. The Commission's original proposals for a Directive
have been debated for some months and, although the legislation is still to be
finalised, we are hopeful that the worst outcomes of the original proposals
will be avoided for investment trusts. Again, we will keep shareholders advised
of progress.
Outlook
Despite the well-publicised economic headwinds, we do expect the global economy
to continue to grow, albeit at a slower pace, during the remainder of 2010.
Smaller companies have outperformed larger companies in recent months and we believe
that by continuing to invest in good quality growth companies, especially those with
overseas earnings rather than companies exposed to the UK consumer and government,
our portfolio should continue to perform well.
Richard Brewster
13 October 2010
Interim Management Report and Responsibility Statement
The Chairman's Statement and the Investment Manager's Report give details of
the important events which have occurred during the period and their impact on
the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
- Performance;
- Income/dividend;
- Regulatory;
- Operational; and
- Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Accounts for the year ended 28 February 2010.
A detailed explanation can be found on pages 13 and 14 of the Annual Report and
Accounts which is available on the website maintained by the Investment
Manager, BlackRock Investment Management (UK) Limited, at www.blackrock.co.uk/
its.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks since the previous report and these principal risks and
uncertainties are equally applicable to the remaining six months of the
financial year as they were to the six months under review.
Related party transactions
The Investment Manager is regarded as a related party and details of the
management fees payable are set out in note 3 and note 9.
Directors' responsibility statement
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
- the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with applicable UK Accounting
Standards and the Accounting Standards Board's Statement `Half Yearly Financial
Reports'; and
- the interim management report, together with the Chairman's Statement and
Investment Manager's Report, include a fair review of the information required
by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.
The half yearly report has been reviewed by the Company's auditors.
The half yearly financial report was approved by the Board on 13 October 2010
and the above responsibility statement was signed on its behalf by the
Chairman.
Richard Brewster
By order of the Board
13 October 2010
Investment Manager's Report
Market review and overall investment performance
Markets have been volatile since late April, driven by concerns about the
strength of economic recovery in various parts of the world and by worries
about the excessive borrowing of some southern European countries. In the UK,
the new coalition government has stated a clear intention to tackle our
excessive budget deficit; the implications on UK public spending, the extent of
public sector job cuts and their effect on consumer spending have yet to be
seen. In the US, the initial pace of economic recovery seems to have slowed.
Emerging market growth still looks strong, especially in most Asia Pacific
markets and in Brazil. Within Europe, the German economy has recovered strongly
from a deep downturn.
This has been a difficult environment in which to manage the portfolio but we
have fared well by retaining our investment in good quality stocks, many of
which are exposed to the higher growth areas of the world. The Company's NAV
per share rose by 13.9% on a capital only basis over the six month period, well
ahead of the benchmark index which increased by 3.6%. By comparison with larger
companies, the FTSE 100 Index fell by 2.4% over the same period.
Portfolio performance
From a stock point of view, our holdings in Encore Oil, Hutchison China
Meditech, Abcam, Aveva Group, Blinkx and Domino Printing Sciences each
contributed at least 0.5% to relative performance. Encore Oil drilled the
Catcher well in the North Sea and discovered light oil. This find is
increasingly looking like one of the largest in the North Sea in recent years.
Encore also drilled an appraisal well on the Cladhan prospect; this too was
successful and is very material. Hutchison China Meditech supplies traditional
Chinese medicines into China. These vary from over the counter cold remedies to
prescription cardiovascular drugs. A number of these are included on the
Chinese government's Essential Medicines List, giving a high level of comfort
about future sales levels. Sales are continuing to grow well. Abcam supplies
antibodies to research scientists around the world. Its half year results
showed continuing strong trading with earnings up by 54%. Aveva supplies
software which enables large energy, chemical and shipbuilding companies to
design new plant or vessels and subsequently manage them. They continue to
trade very well. Blinkx is, like Abcam, heavily focused on the internet. Blinkx
believe they are the world's largest and most advanced video search engine,
with an index of over 35 million hours of searchable video. Revenues are
running well ahead of previous market expectations and it has made a number of
positive announcements about tie ups with Samsung, BBC World News and others.
Domino Printing announced very strong interims, well ahead of expectations,
with equipment sales recovering sharply from the low levels of the first half
of the previous year.
The main disappointment from a stock point of view was BATM. The stock cost us
0.5% in relative performance during the period. BATM's trading in their
telecoms division has been well behind expectations, with one of their key
customers losing market share mainly, we believe, to Chinese competitors. BATM
still see considerable potential for their telecoms products especially in the
US, but demand may not recover quickly. Their medical division is making better
progress and the Company is financially very strong. We reduced our holding.
Whilst most of our relative outperformance in the period came, as usual, from
stock selection, sector allocation was also positive. The two sectors that
contributed most were electronic & electrical equipment and industrial
engineering. We were heavily overweight in both sectors and both outperformed
our benchmark index.
Activity
We have seen a marked increase in bid activity during the period with holdings
in Care UK, Rensburg Sheppards, Chloride and BSS Group all receiving takeover
bids; outside our portfolio there were many other bids for companies in our
investment universe. This is a great time for corporate buyers to make
strategic acquisitions at prices that probably would not be achievable after a
fuller economic recovery.
We have generally seen better value at the smaller end of our investment
universe and so we have sold some of our holdings with market capitalisations
in excess of £1 billion where we have took the view that upside was more
limited. Holdings sold included Charter, Premier Oil, Petropavlovsk and Derwent
London.
We have invested in a range of companies which we see as being well positioned
and attractively valued. Examples include Yule Catto, a polymers company which
derives 52% of its polymers revenues from the Asia Pacific region and other
high growth developing markets, and Mecom, a publisher of local newspapers in
Continental Europe with a rapidly growing online business which is starting to
see better trends in advertising to complement its resilient subscription
revenues. We are attracted to online business models given their inherent
scalability and one new and highly successful business of this type is Blinkx.
Revenue growth is expected to remain very strong. We also invested in a few
IPOs, notably that of Supergroup, best known for its Superdry fashion clothing
brand. Sales and profit growth have been very strong and the share price has
doubled since its IPO.
Portfolio positioning
Our portfolio positioning has not changed materially. The portfolio is built
around good quality growth companies, ones which we know well, run by
management we regard highly, which are truly differentiated and have the
ability to maintain organic growth and margins, generate cash and which have
strong balance sheets; these are our core holdings. We particularly like
companies with high levels of overseas earnings, especially from Asia Pacific;
examples of holdings include Rotork and Hutchison China Meditech. We also like
companies with good revenue visibility or predictability, for instance Abcam
and ITE Group. A key part of our strategy is to invest in companies with high
levels of intellectual property or strong brands, such as Fidessa and Aveva;
these are protected by strong, sustainable barriers to entry and have real
pricing power. We generally prefer companies which have their own products,
rather than service companies, as these tend to be able to scale more quickly.
We are always looking to find interesting new companies which have the
potential to become core holdings in the future. Inevitably new holdings start
off as small holdings in our portfolio until our confidence grows, or until
they concern or disappoint us, in which case we usually sell.
Gearing
We have maintained gearing over the last six months and it has generally been
11% to 12% of NAV. We believe that macro economic conditions suggest slow,
uneven recovery in the global economy but that there are attractive companies
to invest in which can do well in this environment. We feel this warrants the
continued use of gearing.
Outlook
We are encouraged by the performance of our portfolio over the period.
Management of most of these portfolio companies are positive but cautious. Many
run businesses which are exposed to higher growth parts of the world such as
the Asia Pacific region and Brazil. Developed markets are more difficult to
assess, with recent data out of the US rather mixed and generally less positive
than we had hoped for. Europe looks set for an extended period of low growth,
but we are encouraged that the coalition government in the UK is starting to
tackle the large budget deficit.
We believe that a carefully chosen portfolio of smaller companies has the
potential to continue to outperform larger companies.
Mike Prentis
BlackRock Investment Management (UK) Limited
13 October 2010
Investment exposure as at 31 August 2010
Number of % of
investments Portfolio
<£1m 84 21.2
£1m to £2m 51 30.4
£2m to £3m 25 26.3
£3m to £4m 5 7.1
£4m to £5m 4 7.7
£5m to £6m 2 4.6
£6m to £7m 1 2.7
Market capitalisation as at 31 August 2010
% of
Portfolio
< £100m 18.0
£100m to £400m 46.0
£400m to £1bn 27.0
>£1bn 9.0
Twenty Largest Holdings (in alphabetical order)as at 31 August 2010
Company Business activity
Abcam Production and distribution of research grade
antibodies and associated products
Alterian Development and sale of software to improve
customer communication and marketing
Aveva Group Development and marketing of engineering
computer software
Brewin Dolphin Fund management and stockbroking
Holdings
City of London Management of investment funds primarily
Investment Group invested in emerging markets
Domino Printing Manufacture of inkjet and laser commercial
Sciences printers
Eastern Platinum Exploration, development and production of
platinum group metals
Encore Oil Exploration and production of oil and gas
primarily in the UK Continental Shelf
Fidessa group Development and marketing of financial trading
and connectivity software
Gulfsands Petroleum Exploration and production of oil in Syria and
Iraq
Hargreaves Services Mining, importing, processing and supply of
coal and related products
Hutchison China Development and supply of traditional Chinese
Meditech medicines to the Chinese market
ITE Group Organisation of trade exhibitions in Russia
and other FSU countries
Pace Design and sale of digital set top boxes
Rathbone Brothers Private client fund management
Renishaw Design and manufacture of instruments used for
calibration purposes
Rotork Engineering, manufacturing and design of valve
actuators
Spirax-Sarco Design and manufacture of steam management
Engineering systems
Victrex Manufacture and supply of PEEK thermoplastic
products
Western Coal Production of coking and thermal coal in North
America and the United Kingdom
Distribution of investments as at 31 August 2010
Analysis of portfolio %
Oil & Gas Producers 10.0
Oil Equipment, Services & Distribution 0.5
Chemicals 2.5
Industrial Metals 1.5
Mining 8.7
Construction & Materials 1.4
Aerospace & Defence 1.2
General Industrials 0.5
Electronic & Electrical Equipment 7.4
Industrial Engineering 8.0
Industrial Transportation 0.4
Support Services 6.5
Beverages 2.2
Household Goods & Home Construction 1.2
Health Care Equipment & Services 2.5
Pharmaceuticals & Biotechnology 3.2
Food & Drug Retailers 0.6
General Retailers 3.7
Media 5.6
Travel & Leisure 1.3
Fixed-Line Telecommunications 1.1
Electricity 0.7
Non life Insurance 1.2
Real Estate Investment & Services 2.8
Real Estate Investment Trusts 1.9
Financial Services 7.9
Other Financials 0.2
Software & Computer Services 10.9
Technology Hardware & Equipment 4.4
INCOME STATEMENT
for the six months ended 31 August 2010
Revenue £'000 Capital £'000 Total £'000
Six months Six months Year Six months Six months Year Six months Six months Year
ended ended ended ended ended ended ended ended ended
31.08.10 31.08.09 28.02.10 31.08.10 31.08.09 28.02.10 31.08.10 31.08.09 28.02.10
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Gains on
investments
held at
fair value
through
profit or
loss - - - 26,255 52,809 74,267 26,255 52,809 74,267
Income from
investments
held at
fair value
through
profit or
loss (note 2) 2,748 2,346 4,208 - - - 2,748 2,346 4,208
Other
income
(note 2) 233 20 66 - - - 233 20 66
Investment
management
and
performance
fees (note 3) (144) (111) (239) (958) (333) (1,121) (1,102) (444) (1,360)
Write back
of prior
years' VAT
(note 3) - (12) 176 - - 526 - (12) 702
Other
operating
expenses (159) (145) (316) - - - (159) (145) (316)
----- ----- ----- ------ ------ ------ ------ ------ ------
Net return
before
finance
costs and
taxation 2,678 2,098 3,895 25,297 52,476 73,672 27,975 54,574 77,567
Finance
costs (166) (152) (308) (497) (454) (920) (663) (606) (1,228)
----- ----- ----- ------ ------ ------ ------ ------ ------
Return on
ordinary
activities
before
taxation 2,512 1,946 3,587 24,800 52,022 72,752 27,312 53,968 76,339
Taxation on
ordinary
activities (14) (15) (15) - - - (14) (15) (15)
----- ----- ----- ------ ------ ------ ------ ------ ------
Return on
ordinary
activities
after
taxation 2,498 1,931 3,572 24,800 52,022 72,752 27,298 53,953 76,324
===== ===== ===== ====== ======= ======= ======= ======= =======
Return per
ordinary
share (note 4) 5.22p 4.00p 7.41p 51.79p 107.80p 150.92p 57.01p 111.80p 158.33p
===== ===== ===== ====== ======= ======= ======= ======= =======
The total column of this statement represents the Income Statement of the Company. The supplementary revenue and
capital columns are both prepared under guidance published by the Association of Investment Companies. The Company has
no recognised gains or losses other than those disclosed in the Income Statement and the Reconciliation of Movements in
Shareholders' Funds. All items in the above statement derive from continuing operations. No operations were acquired or
discontinued during the period.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 31 August 2010
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
For the six months
ended 31 August 2010
(unaudited)
At 28 February 2010 12,498 38,952 1,982 121,791 7,044 182,267
Return for the
period - - - 24,800 2,498 27,298
Dividends paid (a) - - - - (1,963) (1,963)
------ ------ ----- ------- ----- -------
At 31 August 2010 12,498 38,952 1,982 146,591 7,579 207,602
------ ------ ----- ------- ----- -------
For the six months
ended 31 August 2009
(unaudited)
At 28 February 2009 12,498 38,952 1,982 50,566 6,267 110,265
Return for the
period - - - 52,022 1,931 53,953
Shares purchased and
held in treasury - - - (607) - (607)
Dividends paid (b) - - - - (1,831) (1,831)
------ ------ ----- ------- ----- -------
At 31 August 2009 12,498 38,952 1,982 101,981 6,367 161,780
------ ------ ----- ------- ----- -------
For the year ended
28 February 2010
(audited)
At 28 February 2009 12,498 38,952 1,982 50,566 6,267 110,265
Return for the year - - - 72,752 3,572 76,324
Shares purchased and
held in treasury - - - (1,527) - (1,527)
Dividends paid (c) - - - - (2,795) (2,795)
------ ------ ----- ------- ----- -------
At 28 February 2010 12,498 38,952 1,982 121,791 7,044 182,267
------ ------ ----- ------- ----- -------
(a) Final dividend of 3.60p per share and special dividend of 0.50p per share
for the year ended 28 February 2010, declared on 22 April 2010 and paid on
22 June 2010.
(b) Final dividend of 3.10p per share and special dividend of 0.70p per share
for the year ended 28 February 2009, declared on 22 April 2009 and paid on
24 June 2009.
(c) Final dividend of 3.10p per share and special dividend of 0.70p per share
for the year ended 28 February 2009, declared on 22 April 2009 and paid on
24 June 2009 and interim dividend of 2.00p per share for the six months ended
31 August 2009, declared on 7 October 2009 and paid on 2 November 2009.
BALANCE SHEET
as at 31 August 2010
31 August 31 August 28 February
2010 2009 2010
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Fixed assets
Investments held at
fair value through
profit or loss 230,519 177,108 203,355
------- ------- -------
Current assets
Debtors 2,943 3,657 1,064
------- ------- -------
2,943 3,657 1,064
Creditors - amounts
falling due within
one year
Bank overdraft (8,020) (1,695) (6,116)
Other creditors (3,013) (2,478) (1,216)
------- ------- -------
Net current
liabilities (8,090) (516) (6,268)
------- ------- -------
Total assets less
current liabilities 222,429 176,592 197,087
Creditors - amounts
falling due after
more than one year (14,827) (14,812) (14,820)
------- ------- -------
Net assets 207,602 161,780 182,267
======= ======= =======
Capital and reserves
Share capital 6 12,498 12,498 12,498
Share premium 38,952 38,952 38,952
account
Capital redemption 1,982 1,982 1,982
reserve
Capital reserves 146,591 101,981 121,791
Revenue reserve 7,579 6,367 7,044
------- ------- -------
Total equity
shareholders' funds 4 207,602 161,780 182,267
======= ======= =======
Net asset value per
ordinary share 4 433.59p 335.68p 380.68p
======= ======= =======
CASH FLOW STATEMENT
for the six months
ended 31 August 2010
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2010 2009 2010
£'000 £'000 £'000
Note (unaudited) (unaudited) (audited)
Net cash inflow from
operating activities 2,220 2,300 3,927
Servicing of finance (648) (591) (1,214)
Tax paid (23) - (39)
Capital expenditure
and financial
investment
Purchases of
investments (41,936) (48,414) (104,882)
Proceeds from sales
of investments 40,446 46,178 99,144
------- ------- -------
Net cash outflow from
capital expenditure
and financial
investment (1,490) (2,236) (5,738)
------- ------- -------
Equity dividends paid (1,963) (1,831) (2,795)
------- ------- -------
Net cash outflow
before financing (1,904) (2,358) (5,859)
------- ------- -------
Financing
Purchase of ordinary
shares - (607) (1,527)
------- ------- -------
Net cash outflow from
financing - (607) (1,527)
------- ------- -------
Decrease in cash in
the period 7 (1,904) (2,965) (7,386)
======= ======= =======
RECONCILIATION OF NET RETURN BEFORE FINANCE COSTS AND
TAXATION TO NET CASH FLOW FROM OPERATING ACTIVITIES
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2010 2009 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net gain before
finance costs and
taxation 27,975 54,574 77,567
Gains on
investments held at
fair value through
profit or loss (26,255) (52,809) (74,267)
(Increase)/decrease
in accrued income (74) (9) 65
Decrease in debtors - 629 629
Increase/(decrease)
in creditors 574 (58) (67)
Income tax suffered - (8) -
Overseas
withholding tax
suffered - (19) -
----- ------- -------
Net cash inflow
from operating
activities 2,220 2,300 3,927
----- ------- -------
Notes to the Financial Statements
1. Principal activity and basis of preparation
The Company conducts its business so as to qualify as an investment trust
company within the meaning of section 1158 of the Corporation Tax Act 2010. The
half yearly financial statements have been prepared using the same accounting
policies set out in the Company's financial statements for the year ended 28
February 2010.
Under FRS 26 "Financial Instruments: Recognition and Measurement" the Company
has designated its assets and liabilities as being measured at "fair value
through profit or loss". The fair value of fixed asset investments is deemed to
be the bid market value at the close of business on the balance sheet date. The
taxation charge has been calculated by applying an estimate of the annual
effective tax rate to any profit for the period.
The financial statements have been prepared in accordance with applicable
Accounting Standards, pronouncements on half yearly reporting issued by the
Accounting Standards Board and the Statement of Recommended Practice "Financial
Statements of Investment Trust Companies" ("SORP") revised in January 2009.
2. Income
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2010 2009 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Investment income:
UK listed
dividends 2,461 2,086 3,817
Overseas listed
dividends 287 260 391
----- ----- -----
2,748 2,346 4,208
----- ----- -----
Other income:
Deposit interest - 1 1
Interest on VAT
refunds 227 - 34
Underwriting
commission 6 19 31
----- ----- -----
233 20 66
----- ----- -----
Total 2,981 2,366 4,274
----- ----- -----
3. Investment management and performance fees
Six months ended Six months ended Year ended
31 August 2010 31 August 2009 28 February 2010
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment
management
fee 144 432 576 111 333 444 239 717 956
Performance
fee - 526 526 - - - - 404 404
--- --- ----- --- --- --- --- ----- -----
144 958 1,102 111 333 444 239 1,121 1,360
Write back
of prior
years' VAT - - - 12 - 12 (176) (526) (702)
--- --- ----- --- --- --- --- ----- -----
144 958 1,102 123 333 456 63 595 658
--- --- ----- --- --- --- --- ----- -----
The investment management fee is calculated based on 0.65% in respect of the
first £50 million of the Company's total assets less current liabilities,
reducing to 0.5% thereafter. A performance fee is payable at the rate of 10% of
the annualised excess performance in the two previous financial years, applied
to the average of the total assets less current liabilities of the Company. The
fee is payable annually in April and is capped at 0.25% of the average of the
total assets less current liabilities.
Performance fees have been wholly allocated to capital reserves as the
performance has been predominantly generated through capital returns of the
investment portfolio. A performance fee of £526,000 has been accrued for the
six month period to 31 August 2010 (six months ended 31 August 2009: nil and
the year ended 28 February 2010: £404,000).
4. Returns and net asset value per ordinary share
Revenue and capital returns per share are shown below and have been calculated
using the following:
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2010 2009 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Revenue return (£'000) 2,498 1,931 3,572
Capital return (£'000) 24,800 52,022 72,752
------- ------- -------
Total return (£'000) 27,298 53,953 76,324
------- ------- -------
Equity
shareholders'
funds (£'000) 207,602 161,780 182,267
------- ------- -------
The weighted
average number of
ordinary shares in
issue on which the
return per
ordinary share was
calculated, was: 47,879,792 48,258,379 48,207,135
The actual number
of ordinary shares
in issue at the
end of each period
on which the net
asset value per
ordinary share was
calculated, was: 47,879,792 48,194,792 47,879,792
Revenue return per
ordinary share 5.22p 4.00p 7.41p
Capital return per
ordinary share 51.79p 107.80p 150.92p
---------- ---------- ----------
Total return per
ordinary share 57.01p 111.80p 158.33p
---------- ---------- ----------
Net asset value
per ordinary share
(debt at par
value) 433.59p 335.68p 380.68p
---------- ---------- ----------
Net asset value
per ordinary share
(debt at fair
value) 429.34p 331.43p 376.42p
---------- ---------- ----------
5. Dividend
The Board has declared an interim dividend of 2.20p per share (2009: 2.00p per
share) payable on 26 November 2010 to shareholders on the register as at
22 October 2010. The total cost of this dividend, based on 47,879,792 shares in
issue at 13 October 2010, is £1,053,000 (2009: £964,000).
6. Share capital and shares held in treasury
Ordinary Treasury Nominal
shares shares Total value
number number shares £'000
Allotted, issued and fully
paid share capital
comprised:
Ordinary shares of 25p
each
---------- --------- ---------- ------
At 1 March 2010 and
31 August 2010 47,879,792 2,113,731 49,993,523 12,498
---------- --------- ---------- ------
7. Movement in net debt
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2010 2009 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Reconciliation of
net cash flow to
movement in net
debt
Decrease in cash
in the period (1,904) (2,965) (7,386)
Foreign exchange
movements - (1) (1)
Amortised
debenture stock
issue expenses (7) (6) (14)
------- ------- ------
Movement in net
debt in the period (1,911) (2,972) (7,401)
Opening net debt (20,936) (13,535) (13,535)
------- ------- ------
Closing net debt (22,847) (16,507) (20,936)
------- ------- ------
8. Publication of non statutory accounts
The financial information contained in this half yearly financial report does
not constitute statutory accounts as defined in the Companies Act 2006. The
financial information for the six months ended 31 August 2010 and 31 August
2009 has not been audited.
The information for the year ended 28 February 2010 has been extracted from the
latest published audited financial statements which have been filed with the
Registrar of Companies. The report of the auditors on those accounts contained
no qualification or statement under sections 498(2) or 498(3) of the Companies
Act 2006.
A copy of the half yearly financial report will be available on the BlackRock
Investment Management (UK) Limited website at www.blackrock.com/its.
9. Related party disclosure
The fee due to the Investment Manager for the six months ended 31 August 2010
amounted to £1,102,000 (six months ended 31 August 2009: £444,000 and year
ended 28 February 2010: £1,360,000). At the period end, £1,225,000 was
outstanding in respect of investment management and performance fees (six
months ended 31 August 2009: £666,000 and year ended 28 February 2010:
£662,000).
10. Annual results
The Board expects to announce the annual results for the year ended 28 February
2011, in late April 2011. Copies of the annual results announcement can be
obtained from the Secretary on 020 7743 3000. The annual report should be
available by the beginning of May 2011, with the Annual General Meeting being
held in June 2011.
For further information please contact:
Jonathan Ruck Keene, Managing Director Investment Companies - 0207 743 2178
Mike Prentis, Fund Manager - 0207 743 2312
Emma Phillips, Media & Communications - 0207 743 2922
BlackRock Investment Management (UK) Limited
or
William Clutterbuck - 0207 379 5151
The Maitland Consultancy
END
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